Senate bill aims to increase transparency in cattle pricing
Iowa Senator Chuck Grassley has introduced a bill that mandates a minimum level of negotiated cash cattle trade
It requires a minimum of 50 percent of a meat packer’s weekly volume of beef slaughter be purchased on the open or spot market.
“This change is needed to increase price discovery for producers across the country,” Grassley says. “Independent producers deserve to be paid what their beef is worth.”
Grassley says only 20 percent of today’s cattle market transactions involve negotiated cash trade. The other 80 percent is done through formula contracts.
“Those private contracts don’t allow for price transparency and they hide the true value of production from the rest of the marketplace,” he says.
Co-sponsors of the bill are Senators Jon Tester (D-Mont.), Tina Smith (D-Minn.), Joni Ernst (R-Iowa), Mike Rounds (R-S.D.), Cindy Hyde-Smith (R-Miss.) and Steve Daines (R-Mont.).
The Iowa Cattlemen’s Association (ICA) applauded the bill’s introduction.
“This problem has plagued our industry for years,” says ICA CEO Matt Deppe. “With the reauthorization of Livestock Mandatory Reporting scheduled for later this year, now is the time to take action.”
The United States Cattlemen’s Association (USCA) also expressed support for the bill.
“This bill would allow the Livestock Mandatory Reporting system to be better utilized as a mechanism for accurate and transparent reporting, which will advance price discovery and shore up the fundamentals of the CME cattle futures contracts,” the USCA said in a statement.
AUDIO: Excerpt from Grassley’s conference call with ag reporters